Are you in the market to purchase one of the 300,000 new homes the government has recently pledged to build each year in the UK? Get the best price possible and potentially save yourself £000’s by reading our guide on how to negotiate the very best deal on a new build house or flat…
Most developers will expect buyers to haggle to a greater or lesser extent, but there are a minority who simply pay the asking price without question.
It’s true that negotiation won’t always be possible, and relies on a number of factors, including:
You can’t control these various factors, but what you are in control of is giving yourself the best chance of success, if negotiation is feasible.
There’s undoubtedly a premium to be paid with any brand new home, but it’s no surprise to hear that builders often inflate prices. Before even considering asking for a discount, you should firstly try to establish what the property is actually worth. After all, getting a 10% discount on the list price and some free carpets thrown in might feel like a win, but not if the property’s asking price was 20% more than the market rate.
Consider these tips:
As soon as you move in, the value of your new house or flat will depreciate. If you pay over the odds, you could be in negative equity for many years to come. Money is made on a property when it’s bought, just as much as when it’s sold, and it’s therefore vitally important to establish the true value and not be swept along by the market or other influences.
Once you’ve established the approximate real value of your potential new home you’ll be clearer on how to approach one of the most straightforward and common negotiation points – the price.
Again, scope for negotiation on this point is reliant on a variety of factors, but single digit percentage discounts are quite common. Double digit percentage discounts are certainly not unheard of, and indeed prices paid by various buyers on the same development can often vary greatly. There’ll be nothing more annoying than in six months’ time your neighbour telling you over the garden fence how much less than you they paid.
Although a cash discount is highly desirable, developers can sometimes be reluctant to give these, for a number of reasons:
To a minor degree a discount on the price could actually negatively affect you as well, when you eventually come to sell. Your buyer will know exactly how much you paid and could be more encouraged to haggle if they know that you’ve got more equity in the property.
A discount is still a highly favourable option for you but, if the developer is completely unwilling to negotiate on price, then best to try to haggle for some alternative benefits….
As an alternative to a straightforward discount on the purchase price, some developers will agree to pay some or all of your stamp duty. The advantage of the developer offering this is that it won’t be reflected in the final sale price, thus protecting the perceived value of their other properties. You still effectively get a discount, and so it’s a win-win for both parties.
Like other forms of incentive, it’s important to be aware that any developer contribution towards stamp duty could be seen as a cash incentive and therefore taken away from the amount your mortgage provider is prepared to lend you.
You may be able to part exchange your existing property with the developer. This saves you the time, hassle and money involved in trying to sell separately.
Although this option offers convenience, it’s important to still try to get market value. Valuations from three separate local estate agents is a good way to establish this. The developer may actually be able to give you a better-than-market price, especially as they’d often prefer to do this rather than discounting the value of the new property.
A smaller additional benefit of part exchange is that some buyers are able to negotiate an overlap period, whereby they move possessions out of their old property and into the new one over the course of a few transitional days. Much less stressful than trying to get everything done in one day.
Ensure you’re fully aware of the property’s specifications and what you’ll actually be getting. It’s impossible to appreciate the full value, or negotiate for extras, until you know what comes as standard, and so try to be clear on exactly what is and isn’t included as soon as possible. That said, in the early days of a newly launched development specifications might not yet have been finalised by head office, and so negotiating on these points could prove difficult.
It’s also useful to know about any associated costs, such as ground rent or service charges.
For unsold houses that are either yet to be built, or are at anything up to the ‘first fix’ stage, there’s the opportunity to negotiate on all sorts of specifications. It’s also useful to bear in mind that many items don’t come as standard and therefore might not be things that you’d budgeted for – even more incentive to get them thrown in for free.
What’s more, getting them now will also save the time and hassle of sourcing these later, plus finding the tradespeople to fit them.
Here’s a list of some of the main ‘optional extras’ that buyers are often able to secure for free from developers:
Negotiating extras is one of the most common ways to get a better deal, but it’s worth considering these points:
You may be able to negotiate for other costs to be paid, including:
Admittedly not the biggest saving suggestion in this article, but do check the developer’s website before viewing a show home, as some offer small incentives, such as vouchers, just for booking an appointment to view. Every little helps!
For the best deal, it’s almost always better to negotiate in the early or late stages of a development. Which one’s best will vary on the circumstances and there are pros and cons to each. Buy early and you’re likely to be living on a building site for a while, try to buy late and you may miss out. However, there’s potentially much to gain.
Why it can be best to negotiate with developers in the early stages:
Why it can be best to negotiate with developers in the late stages:
Developers will often try to restrict supply in order to maintain prices (and therefore demand). However, they can’t always successfully achieve this balancing act and if you engage with them during one of these early or late stages, they’ll be more inclined to give you the best deal possible.
Like any sales-orientated company, developers are usually more inclined to want to do deals at certain times:
Like any of us, builders don’t like chains. Unpredictable timescales can play havoc with their business and so if you’re ready to move quickly you’re in a strong position.
Some tips to consider:
If you’re a first time buyer, you can take advantage of the Government’s ‘Help to Buy: Shared Ownership’ scheme, whereby you purchase between 25% and 75% and pay rent on the remainder. Deposits are also usually lower.
Note that developers are fully aware that first time buyers who participate in this scheme can only buy a new property and therefore sometimes feel they’re in a stronger position to resist haggling. However, stand firm – as a first time buyer you’re just as entitled to negotiate, and the developer should be reminded that there’s plenty of other new builds in the vicinity, if you can’t get the deal you want.
Be on the lookout for sales that have fallen through. Developers need to ensure sales targets and cashflow remains on track, and so will often consider selling for less.
Consider leaving your details with the sale consultant and advising that you’re interested in any properties that don’t successfully complete. You’ll be most attractive to them if you are in a position to react to any opportunity and move quickly.
Also, remember that the developer will have retained the previous buyer’s deposit, which means they’ll have already made a very slight profit, which in turn gives you more leverage on the price.
Homes nearer to roads, with less attractive outlooks or smaller plots are often less appealing and therefore have a higher chance of being discounted.
Ok, so strictly speaking it’s no longer a new build, but if you’re pondering a larger development which has already had multiple phases completed, it may be worth you considering a pre-owned property. You’ll enjoy all of the benefits of a nearly new property – plus any snagging issues have probably already been addressed - and best of all it is likely to be priced very competitively, if it’s to stand any chance of selling.
It’s highly likely that you know at least a few people – friends, family and colleagues – who have purchased a new home in the past. Ask them for their experiences and advice.
Additionally, check online for feedback on local community forums, or even try to engage in conversation with your prospective new neighbours, if the site is already part-occupied.
You’ll be dealing with a sales consultant on most reasonably sized developments. Before you begin any serious discussions with them, it’s worth writing down exactly what your minimum expectations are for the various things you’ll try to negotiate on. Things can move very quickly during discussions and it can be easy to lose track of exactly how much you’ve gained, so a simple checklist will help you recap.
As well as noting down your expectations, ensure you’re aware of some key points prior to entering into any negotiation.
Things to find out:
As with any negotiation, you’re in the strongest position if you don’t get emotionally involved and are prepared to walk away. This also means that you’re best placed to make some ambitious offers.
Negotiations can take a while – be patient, as holding out to get that extra few thousand pounds in value is certainly worth it. The figures may seem relatively trivial compared to the hundreds of thousands you’re spending on the property itself, but think about how much time and effort it would take you to earn that amount of money in your job, or consider that the saving could pay for many things, such as furniture.
If you’ve left a final offer with the sales consultant you might not ever hear from them again, but equally many prospective buyers do receive a call, days weeks or even months afterwards, and then you might just be able to grab yourself a bargain.
There are a number of tips on how best to deal with the sale representative, who you’ll be liaising with if buying on most medium to large scale developments:
In almost all circumstances, it’s best to conclude negotiations before you pay the reservation fee / deposit. It stands to reason that once a developer thinks they have a sale, they’ll be much less inclined to negotiate.
The only exception to this is if the reservation fee is low (for example, £500) and you’re prepared to lose that if subsequent negotiations aren’t to your satisfaction.
Ensure that you get everything that’s agreed to in writing. Once you’ve signed on the line, check and re-check to ensure you get the deal you agreed - if possible, pay visits to your property during its construction. Once you move in, review the specification fully and tick everything off, to ensure you have all that you were promised.
There are a variety of benefits to buying a new build property, and one of these is that, on the whole, a developer is keener to sell than a private vendor, and this puts you in a relatively good position from the onset. Start by being clear in your own mind what the maximum is that you’re prepared to pay. Then, have a strategy for securing discounts or add-ons, and prioritise these.
With careful planning, confidence and a bit of luck, you could secure a great deal on a brand new home.
Unni & Evans is an independently owned furniture e-tailer, supplying high quality items to customers throughout the UK. We offer lines that aren’t readily available in the high street, including distinctive walnut and reclaimed ranges, plus a wide selection of traditional and contemporary dining room chairs.